“We must pursue upstream-downstream linkages between the enterprises involved in the mining, production, circulation, import and export of the rare earth metals industrial sectors. We must address both the symptoms and root causes to resolve the problem of rare earth resources developments…” the State Council’s joint investigation panel of the rare earth industry said during a meeting held on December 14, 2012. The message suggests that China will continue to strengthen supervision over the rare earths industry in 2013.

In 2012, the Chinese government has formulated and adopted a series of policies and measures for the rare earths sector that will no doubt be further developed and put into practice in 2013. Some of the important policies and measures are:

▲ The “Rare Earth Industry Access Conditions”, the ”Provisional Measures on the Indicative Production Plan for Rare Earths” and the policies of merger and reorganization will continue in order to address over-capacity in smelting and separating.

▲ The Ministry of Industry and Information Technology (MIIT) will introduce a plan to implement and establish state-level and large-scale rare earth conglomerates in 2013. China North Rare Earths (Group) Hi-tech Co. will be led by the Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co. (IMBREHT) to integrate light rare earth resources in the country’s northern region. Two or three state-level and large heavy rare earth groups also will be established in the country’s southern region. Among these, China South Heavy Rare Earths (Group) will be established in Ganzou, Jiangxi province and probably led by China Minmetals Corporation (CMC), Rare Earth Group and Ganzhou Rare Earth Group with another from the China South Heavy Rare Earths (Group) to be established in Guangdong province, I guess that it will be led by China Nonferrous Metal Mining Group (CNMC) Rare Earth Group with the likely leadership of China Iron & Steel Research Institute Group (CISRI), Guangdong Rare Earth Group and Yunnan Rare Earth Group.

▲ The REE trading platform will be opened in 2013. The exchange will be a way of giving more “transparency, visibility and consistency” to the rare earth market. Moreover, it is worthwhile to note that the China Securities Regulatory Commission (CSRC) has started to investigating the viability of setting up a rare metals futures trading center in Ganzhou, Jiangxi province, probably to be operated by both of China’s trading platforms.

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▲ The joint supervision system for the exploitation of industrial rare earths aims to curb illegal rare earth mining, producing, trading and smuggling. I think that the government will continue to crack down on illegal enterprises with strength and determination to close the supervision loopholes, using stricter regulatory measures, resulting in a likely increase in rare earth prices.

▲ China’s relevant departments are studying the potential to include rare earths into the scope of ad valorem tax so as to lift the tax rate, aiming to protect rare earth resources by way of a tax increase. So the new tax policy on rare earth resources could be released by the Chinese government in 2013.

▲ The Chinese government will continue to actively promote an international rare earth strategy in accordance with established State Council guidelines. In principle, the technical exchange will be the focal point of the government’s international cooperation plans, given that it will become the main area of foreign policy in the future. I think that the Governmetn will outline the new international strategy for rare earths in 2013. In addition, China will encourage competitive rare earth enterprises to “go global” by investing abroad.

Overall, it appears that in 2013, China’s unilateral rare earth supply pattern will be replaced by a multilateral supply one for the global market, especially in the light rare earth sectors. Meanwhile, as for the WTO rare earths trade dispute, which should affect the formation of some China’s rare earth policies, Sino-Japan relations are deteriorating over control of the Diaoyu Islands, adding uncertainty and affecting the global rare earth market.